Disney earnings: The film studio is putting together a record year as TV suffers

TreyWilliams

Reporter

Walt Disney Co. continues to have a record year at the box office, while its TV networks are in a tumultuous ratings period. The media and entertainment company will open its books and report earnings for its fiscal fourth quarter after the market closes on Thursday.

Here’s what investors can expect:

Earnings: Disney
DIS, +2.14%
is expected to report earnings of $1.16 per share for the fourth quarter, according to analysts estimates tracked by FactSet. That would be more than a 28% decline from last quarter’s earnings and a more than 3% drop compared with the same fourth-quarter period a year earlier. Disney has reported earnings below FactSet consensus once — second quarter 2016 — in the last 20 quarters.

Revenue: Disney’s revenue for the quarter is expected to hit $13.53 billion, down 5% from last quarter and up slightly from the $13.51 billion the company reported during the same quarter last year. Disney has beat FactSet’s consensus on revenue in seven of the past 10 quarters.

Disney’s media networks, led by its cable networks, are expected to provide the lion’s share of revenue, with $5.91 billion. Disney parks and resorts are forecast to bring in $4.57 billion and its film business is expected to bring in $1.84 billion.

Estimize also expects Disney revenue to come in at $13.53 billion.

Share price: Disney shares have fallen nearly 10% in the year to date, underperforming the S&P 500 Index
SPX, +0.22%
, which is up 5.9%. In the trailing 12-month period, Disney shares are down more than 18%.

The 34 analysts following the stock on FactSet hold an average overweight rating on Disney, with an $108.82 12-month price target, which is a more than 15% premium to Tuesday trading levels.

Other issues: Disney has manufactured a 2016 slate of films that has pushed the studio to record breaking numbers. Disney is now the fastest studio to have reached $1 billion and $2 billion in domestic box office receipts and the studio has surpassed $6 billion globally, which is just the second time in industry history that’s happened.

It’s important to note that Disney still has likely many more weeks of “Doctor Strange” in theaters and “Moana,” with music from Hamilton creator and star Lin-Manuel Miranda, and “Rogue One: A Star Wars Story” still to come this year.

At the House of Mouse’s media networks the narrative isn’t nearly as rosy. Total-day viewership across Disney’s suite of networks declined 16% year-over-year and fell 17% for prime-time viewership, according Nomura analyst Anthony DiClemente.

Ratings for Monday Night Football, owned by Disney’s ESPN, are down about 20% this season and total prime-time ratings for ESPN have continued the trend of 20% year-over-year declines for the past three months.

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“However, given the strong pricing achieved for its sports programming along with continued college football resilience, we remain optimistic that Disney can achieve our forecast of 4% year-over-year decline in advertising revenue at ESPN in the fourth quarter and a 1% decline for the total cable segment,” DiClemente wrote in a note to clients.

Nomura estimates ad revenue for National Football League games accounts for about 10% of Disney’s total cable network ad revenue.

Disney’s name has also been thrown into takeover conversations recently by analysts, with media reports speculating the company it could be a match for Netflix Inc.
NFLX, -1.71%
reports Disney was considering a bid for Twitter Inc.
TWTR, +0.82%
Neither of those reports, however, were confirmed by Disney.

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